Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Like from New York, I'm Caroline Hyde and I'm Jackie
Speaker 2: Devalas in San Francisco. This is Bloomberg Technology coming up.
Speaker 3: Government and tech leaders descend on Paris for the AI Summit,
Speaker 3: as French President Macron touts the country's very own stargates.
Speaker 3: Plus President Trump says Elon Musk's doge may have found
Speaker 3: quote irregularities at the Treasury Department, and China's BYD is
Speaker 3: putting driver assistance features into most of its cause for
Speaker 3: free and plans to integrate software from Deep Seat.
Speaker 4: But first as.
Speaker 3: Checking on the markets, and actually the Nasdaq pushes higher,
Speaker 3: but Tesla is one of the points.
Speaker 4: Contributed to the downside.
Speaker 3: We'll dig into what buyd means for Tesla competition in China.
Speaker 3: We're up one point three percent, and video lending its
Speaker 3: power to the points that move to the higher side.
Speaker 3: We'll dig into the AI track that drives in Vidia higher.
Speaker 3: But move on to a keystock. You've got to watch
Speaker 3: because as a record high and is up sixteen percent
Speaker 3: for sixteen straight days.
Speaker 4: If we see Meta managed.
Speaker 3: To hold onto these rather small gains on today, Jackie,
Speaker 3: it would be sixteen straight days of gains and a
Speaker 3: lot of it is fueled by AI exuberance. For Meta
Speaker 3: Sweet sixteen, we move on to what's happening over in Paris,
Speaker 3: where it's all about AI. Of course, the summit is
Speaker 3: now underway, bringing together almost one hundred countries and over
Speaker 3: one thousand private sector and civil society representatives, including Prime
Speaker 3: Minister of India. We've also got some outment of open
Speaker 3: AI and this as France is said to announce a
Speaker 3: total of one hundred and thirteen billion dollars in investments
Speaker 3: in AI projects in the country. Bloomleg's Tom McKenzie is
Speaker 3: standing by and rather a kin to stargate here in
Speaker 3: the United States. It's about private sector commitments over in France,
Speaker 3: Tom it is.
Speaker 5: And if the fire had not been lit under the
Speaker 5: feet of policymakers in Europe prior to Deep Seek, prior
Speaker 5: to Stargate, then it certainly has been in recent weeks.
Speaker 5: And this is Macwan's response. The President expects to take
Speaker 5: the stage behind me shortly. Currently you've got Cinder Butcher,
Speaker 5: the CEO of course of Alphabet speaking. The commitment from Macaran,
Speaker 5: as you say, around one hundred and nine billion euros
Speaker 5: one hundred and thirteen billion US dollars, is in part
Speaker 5: an answer to stargate. It is also in part an
Speaker 5: answer to the innovation now coming out of China, and
Speaker 5: it's an attempt by France and Europe to position itself
Speaker 5: to close the gap. Macwen's been quite clear about this.
Speaker 5: This is catch up now for Europe. And here's line
Speaker 5: yesterday in an interview of a French newspaper saying we
Speaker 5: need to invest, invest, invest, along without one hundred and
Speaker 5: thirteen billion US dollars. By the way, you also have
Speaker 5: general catalyst plans for about one hundred and fifty billion
Speaker 5: used audiers. They say they could put to play in France,
Speaker 5: in Europe alongside the likes of Mistral and Spotify and
Speaker 5: other investors to drive and build out infrastructure to layer
Speaker 5: as well on top of the industrial sector of Europe.
Speaker 5: That's where they think the opportunity is. But of course,
Speaker 5: key questions around implementation, key questions about regulation, key questions
Speaker 5: about whether or not we have the data the chips
Speaker 5: and the talents to really compete versus the US and China.
Speaker 2: Tom, this is a huge ambitious effort on behalf of
Speaker 2: the Europeans. But I'm curious because they've usually also been
Speaker 2: those to be at the forefront of regulation, something that
Speaker 2: private companies and some investors don't really love. Have you
Speaker 2: gotten any sense from the executives you've spoken to about
Speaker 2: how that balance is playing out right now?
Speaker 5: There that is very much a live debate to what
Speaker 5: extent Europe should regulate when it comes to AI. The
Speaker 5: EUAI Act, it is going to start to take hold
Speaker 5: this year. It will be largely fully implemented by twenty
Speaker 5: twenty six, so that is already the door is already open.
Speaker 5: The horse has already bolted on that front. To what
Speaker 5: extent they can tweet the regulation going forward is a
Speaker 5: question mark. But clearly the divide now between Europe's approach
Speaker 5: and the US approach for President Trump ripping up AI
Speaker 5: regulation is stark. Some would say that having the guard
Speaker 5: rails in place in Europe is at least beneficial. At
Speaker 5: least there is the guard rails in place, at least
Speaker 5: there is a track to followed. You do, of course,
Speaker 5: have a disparate landscape in the US state by state
Speaker 5: that potentially could point pose problems for US AI companies
Speaker 5: trying to navigate the state by state regulation. The other question,
Speaker 5: of course, is to what extent Europe can leverage its
Speaker 5: talent that it's got here, and it does have software
Speaker 5: engineering talent the energy as well. France is a big
Speaker 5: producer of nuclear energy. That's a benefit. We do not
Speaker 5: have semiconductors, we do not have companies like Huawei in
Speaker 5: China on video in the US, so that remains a challenge.
Speaker 5: But they're hoping that at the end of this summer
Speaker 5: they come through with a proposal, they can meet some
Speaker 5: of the challenges and really get to grips on the
Speaker 5: implementation of this.
Speaker 2: That's Bloomberg's Tom mackenzie.
Speaker 4: Thank you.
Speaker 2: Here's something that came out of one of Tom's interviews
Speaker 2: at the Paris I Summit earlier today. The head of
Speaker 2: Google's Deep Mind, Demasisabus, questioning the notion that China's Deep
Speaker 2: Seek actually spent less than six million dollars to develop
Speaker 2: its aisystem.
Speaker 6: The first thing to say is it's a very impressive model,
Speaker 6: or very impressive piece of work. I think the team
Speaker 6: is probably the best team that I've seen come out
Speaker 6: of China. So that said, I think a lot of
Speaker 6: the claims are exaggerated and a little bit misleading.
Speaker 3: Let's bring in RBC Capital Markets Internet analyst Brad Ericson
Speaker 3: for more on the AI landscape, on the race, so
Speaker 3: called race between US and China, and Brad, when you
Speaker 3: hear of deep Sea, you know, it seems as though
Speaker 3: people are questioning the overall amount. Therefore, do you like
Speaker 3: Amazon committing to one hundred billion dollars to Microsoft more
Speaker 3: than eighty and similar coming out of Meta for example.
Speaker 7: Yeah, I think for the moment, they have the revenue
Speaker 7: growth to support those investments. I think people are right
Speaker 7: to question the long term return on invested capital equation there,
Speaker 7: which is really where the debate has shifted. But I
Speaker 7: think for the moment, again, we're in this moment where
Speaker 7: we don't know how big this technology can become, and
Speaker 7: so I think we lean on those statements such as
Speaker 7: the risk of underinvestment is far greater than the risk
Speaker 7: of overinvestment.
Speaker 8: I do think that's kind of the prudent way for
Speaker 8: these companies to be treating this for the time being.
Speaker 3: And look, investors have thus far given them a pass.
Speaker 3: Look at Meta shares extraordinary sixteen day run to the
Speaker 3: higher side. Many would say that the open source commitment
Speaker 3: from Meta has been speaking to their large language model operation,
Speaker 3: the commitment to leaning into AI, even as of course
Speaker 3: they're announcing who's going to be hit by the job
Speaker 3: cuts today. Just talk to us about some of the
Speaker 3: thesis around Meta outperforming the other big tech players here.
Speaker 8: Yeah, sixteen game hitting streak is pretty impressive.
Speaker 7: I would say Meta has kind of the two key
Speaker 7: things going for it right now. One, they have arguably
Speaker 7: the greatest amount of revenue coverage.
Speaker 8: It's what we call it.
Speaker 7: So again, just when you look at the marginal revenues
Speaker 7: they're adding, they just did twenty seven billion dollars a
Speaker 7: year over year in twenty twenty four. That's plenty of
Speaker 7: extra revenue dollars to cover the depreciation that's coming into
Speaker 7: the model from the capex spen. So that's the first part.
Speaker 7: The second part is they just have a heck of
Speaker 7: a great narrative on all the ways that AI could
Speaker 7: affect their products, both now and in the future. And
Speaker 7: so I think the market is what the market's telling
Speaker 7: you right now is they really believe in Meta's strategy
Speaker 7: and really AI giving it the most torque.
Speaker 8: To the upside in the future for.
Speaker 2: This model, Brad, I want to talk about open source
Speaker 2: technology now that we're on the topic of Meta, because
Speaker 2: in your note you actually highlight startups desire to want
Speaker 2: to build more N specific applications on top of already
Speaker 2: existing AI and I'm curious how that shift is better
Speaker 2: for investors. Are open source companies better position than closed
Speaker 2: source companies like open AI for example.
Speaker 7: You know, I think there's a debate as to whether
Speaker 7: the closed source guys actually do decide to open things
Speaker 7: up because it could to the improvement of their models
Speaker 7: or the improvement of their distribution over time.
Speaker 8: Clearly, you know Meta's open source strategy. I don't want
Speaker 8: to call it a wolf in sheep's clothing.
Speaker 7: But there is an aspect where they're looking to leverage
Speaker 7: sort of developer intel of the world to be able
Speaker 7: to then potentially pull in those innovations in the model
Speaker 7: and then use them for internal purposes which would never
Speaker 7: see the light of day, and that benefits their products
Speaker 7: longer term. So I do think, you know that's that's
Speaker 7: definitely a part of their strategy and frankly, that's really
Speaker 7: smart from our perspective. So that's that's I think, you know,
Speaker 7: at this point, I think that's how they are leveraging
Speaker 7: open source so well. And again, like I said earlier,
Speaker 7: the market is really buying into that thesis right now.
Speaker 2: One of the other things that we're looking closely at
Speaker 2: today is of course the Paris AI Summit, and we've
Speaker 2: had a few of these summits over the last couple
Speaker 2: of years, ever since child GBT hit the scene. But
Speaker 2: I'm curious as an investor if anything that comes out
Speaker 2: of that really affects your long term thesis, because we
Speaker 2: are talking about big sums of money being poured into
Speaker 2: this space now from the Europeans.
Speaker 8: Yeah.
Speaker 7: Absolutely, It's kind of funny how this is following the
Speaker 7: history of tech right US innovates, China replicates, and Europe regulates.
Speaker 7: Is kind of the famous saying there. Yeah, I mean,
Speaker 7: certainly from a sovereign AI perspective, I think countries recognized
Speaker 7: there's a huge opportunity to modernize and make better use
Speaker 7: of the treasure tropes of data they all have. On
Speaker 7: the flip side, of course, there's a civil society impact here.
Speaker 8: What does it do to jobs? Does it make people
Speaker 8: more productive or does it just straight up take.
Speaker 7: Jobs from and and remove or dislocate industries in an
Speaker 7: adverse way for you know, macroeconomies.
Speaker 8: Those are giant.
Speaker 7: Questions right that are that are certainly being discussed there.
Speaker 7: But I think from this point, you know, our perspective,
Speaker 7: our seat, where we're covering.
Speaker 8: These these Internet names.
Speaker 7: They're making all the investments to push you know, the
Speaker 7: industry and frankly the world forward this with this innovation.
Speaker 8: We have to be behind that at this.
Speaker 3: Point, and you get the infiltration across not only the
Speaker 3: large language model makers but those that adopt general to AI.
Speaker 3: Just think of pinterest numbers last week and how generative
Speaker 3: AI is fed into that story. We get the news
Speaker 3: today from other sources that LIFT is going to be
Speaker 3: eyeing robotaxes as soon as twenty twenty six. Where are
Speaker 3: the level of Internet names that we haven't yet factored in,
Speaker 3: where GENAI is going to really be reaching forward in
Speaker 3: terms of their earnings and revenues.
Speaker 7: Yeah, I think you know, certainly autonomous vehicles you hear
Speaker 7: about particularly around synthetic data, so that's being able to
Speaker 7: take for instance, real world miles and then model them
Speaker 7: out into other situations that you couldn't possibly capture in testing,
Speaker 7: people driving around and accidents that could come up, just
Speaker 7: as an example. So that obviously benefits we think the
Speaker 7: riot hailing names, and there's going to be others.
Speaker 8: You mentioned.
Speaker 7: Digital ads is kind of one of the best sectors
Speaker 7: where you can apply AI. Web design is another sector
Speaker 7: we've mentioned, So that's companies like Wix and GoDaddy.
Speaker 8: Those companies are making it easier than ever to.
Speaker 7: Go out and start a small business, build a website,
Speaker 7: and grow off of that.
Speaker 8: So those are some of the ones in our coverage.
Speaker 2: We like, Brad, we had some big tariff news coming
Speaker 2: out of Washington today. How does that weigh into how
Speaker 2: you're looking at tech names going forward, especially given all
Speaker 2: this talk about AI infrastructure, which will require perhaps some
Speaker 2: of these critical materials.
Speaker 7: Yeah, I mean, I think we'll reserve judgment on what
Speaker 7: the ultimate outcomes of those are given what we've seen
Speaker 7: over the past a few weeks, but I think the
Speaker 7: the impact would align with what the macro impact would be,
Speaker 7: which is if you raise costs, certainly that's probably not
Speaker 7: going to be a good thing for these companies. That
Speaker 7: are building out, certainly Meta, Amazon and Google being the
Speaker 7: three kind of you know, biggest brick layers in this industry.
Speaker 3: I'll be see Capital Markets Internet analyst Brad Erickson.
Speaker 4: Great to get some time with you. Thanks coming up.
Speaker 3: Those may have found irregularities and the Treasury Department that's
Speaker 3: acording to President Trump.
Speaker 9: More on that.
Speaker 4: Next is blue meg technology.
Speaker 8: There could be a problem.
Speaker 10: You've been reading about that with treasuries, and that could
Speaker 10: be an interesting problem because it could be that a
Speaker 10: lot of those things don't count with other words, but
Speaker 10: some of that stuff that we're finding is very fraudulent. Therefore,
Speaker 10: maybe we have less debt than we thought of.
Speaker 8: Think of that.
Speaker 2: That was President Trump speaking an Air Force One ahead
Speaker 2: of yesterday's Super Bowl attendant saying Elon Musk's doze may
Speaker 2: have found irregularities at the Treasury Department. For more, Bloomberg's
Speaker 2: Mike Shepherd joins us. Now, Mike, what do we know
Speaker 2: about what exactly Trump was referring to and what the
Speaker 2: potential implications could be on the treasury market.
Speaker 11: Well, this is one of the great mysteries that emerged
Speaker 11: from that Air Force One conversation with reporters. He raised
Speaker 11: the prospect of irregularity somewhere in the Treasury Department, but
Speaker 11: offered no specifics, nor have we heard from the cost
Speaker 11: cutting team over at Treasury now that's being led by DOZE,
Speaker 11: by executives from this US digital service that DOZE.
Speaker 12: Is working with.
Speaker 11: We don't know what they're referring to as a government contracts.
Speaker 11: Is it excessive spending within the Treasury Department on certain
Speaker 11: cons and we don't know even whether it refers to
Speaker 11: the Treasury's market itself the way the President was discussing
Speaker 11: in that moment. We do know that Scott Bessant, the
Speaker 11: Treasury Secretary, sought during his interview with our colleague Salaiah
Speaker 11: mosen to are for reassurances that everything would be normal
Speaker 11: operationally at Treasury despite whatever Doge might be doing.
Speaker 3: And how much Doge can do when well judge his
Speaker 3: way in and try and halt some of the activity
Speaker 3: is a question mark, Mike, so too, is well laying
Speaker 3: back some of the operations.
Speaker 4: Of other units.
Speaker 3: I'm thinking about the Consumer Financial Protection Bureau seems to
Speaker 3: me now skeletal too.
Speaker 11: Well, that's right, Karen, that is one of the latest
Speaker 11: targets of this cost cutting initiative sweeping through the government.
Speaker 11: DOGE is going really agency by agency, and the Consumer
Speaker 11: Financial Protection Bureau was the latest target over the weekend. Essentially,
Speaker 11: they have shuddered operation. Employees have been told not to
Speaker 11: come into the office.
Speaker 9: And of course this does.
Speaker 11: Coincide with Elon Musk's own efforts to turn x into
Speaker 11: a one platform for all different types of services, not
Speaker 11: just social media and communication, but also turn into a
Speaker 11: place where you could do transactions financially.
Speaker 9: Now, the Doze.
Speaker 11: Team over at CFPP has gotten access to some sensitive
Speaker 11: data our reporting has shown, including bank examination records and
Speaker 11: other information that is closely guarded that's very sensitive. Of course,
Speaker 11: the Consumer Financial Protection Fewer does scrutinize banks and other
Speaker 11: financial services companies for the way that they interact and
Speaker 11: intersect with consumers. And this agency exists, as its name
Speaker 11: would suggest, to protect consumers. You know, there are other
Speaker 11: financial regulators, but this is the one that is really
Speaker 11: geared to look out for the average American and it
Speaker 11: is returned since its inception in twenty eleven, roughly twenty
Speaker 11: one billion dollars in improper payments or improper charges back
Speaker 11: to consumers from these institutions.
Speaker 4: Megs, Mike Shepard, thanks for all of that.
Speaker 3: Meanwhile, Doge gaining a key ally we understand at the
Speaker 3: US Treasury with veteran tech employee Tom Krause, who has
Speaker 3: been appointed a special Government employee and will serve as
Speaker 3: Fiscal Assistant Secretary at the Treasury. But he's also the
Speaker 3: CEO of Cloud Software Group, which saw deep cost cuts
Speaker 3: at Citric Systems.
Speaker 4: For Marburne, Megs, Jordan and Robertson.
Speaker 3: And it is such a deep dive that you do
Speaker 3: with colleagues here, Jordan, just talk us through who Tom
Speaker 3: Krause is and why we're worried about the deep cuts
Speaker 3: he's done in the private sector.
Speaker 9: Yeah, thanks for having me.
Speaker 13: So we're learning more information about Tom Krause, you know,
Speaker 13: the Doge pick Elon Musk's Doge pick at Treasury. As
Speaker 13: you mentioned, he currently holds two jobs, one at Treasury
Speaker 13: and one as CEO of Cloud Software Group. Cloud Software
Speaker 13: Group was formerly known as Citric Systems. That company got
Speaker 13: acquired for sixteen point five billion dollars in a private
Speaker 13: equity leveraged buyout in twenty twenty two. And what we've
Speaker 13: done is we've taken a look at a series of
Speaker 13: pretty significant cost cuts that Kraus enacted at Cloud Software
Speaker 13: Group over the last two two and a half years,
Speaker 13: and in particular the impact of those cuts on the
Speaker 13: security of Citrix products. There's a family of Citrix products
Speaker 13: called NetScaler. These are security appliances that have been at
Speaker 13: the center of a number of major hacks in recent years.
Speaker 13: And what we looked at was to try to quantify
Speaker 13: the level and the extent of the cuts to the
Speaker 13: security department at Citrix and any impact to the security
Speaker 13: of those appliances. And what we found was that the
Speaker 13: cuts were very deep, indeed across the company, including the
Speaker 13: security department, and that this in fact may be why
Speaker 13: Kraus was selected by Musk's doge.
Speaker 9: As for this Treasury role.
Speaker 13: His background is cost cutting, His background is all so
Speaker 13: according to the sources we've spoken with, running incredibly profitable companies,
Speaker 13: you know, this is his specialty.
Speaker 2: Jordan, your reporting raises an important question about employing private
Speaker 2: equity tactics, this cost cutting that you're talking about in
Speaker 2: sensitive sectors. So now kind of take that into the
Speaker 2: government in Washington, where cross now has more influence. What
Speaker 2: has the agency said the Treasury Department as well as
Speaker 2: maybe even the company he's still employed by, which I
Speaker 2: found super surprising.
Speaker 13: Yeah, the Treasury Department says things are you know, operating
Speaker 13: normally while the DOGE team kind of conducts its work,
Speaker 13: you know, over the weekend, Krouse, you know, and other
Speaker 13: DOGE staffers were you know temporarily stopped from accessing data
Speaker 13: and using the data.
Speaker 10: You know.
Speaker 9: However, you know, what.
Speaker 13: The reporting finds is that, you know, this is a strategy,
Speaker 13: a very time honored strategy among private equity companies to
Speaker 13: you know, kind of load up companies with debt, buy
Speaker 13: them with lots of debt. You have to then cut
Speaker 13: lots of costs in order to repay that debt. And
Speaker 13: you know, in terms of the potential impact in the
Speaker 13: federal government, it really depends who you talk to. You know,
Speaker 13: we've spoken to folks and we've included their commentary in
Speaker 13: our story. You know that think that ultimately cross could
Speaker 13: be really a positive thing for the government in terms
Speaker 13: of you know, really aggressively slashing expenses and finding ways
Speaker 13: to be more efficient. We've also spoken to other you know,
Speaker 13: industry experts, security experts, government experts who say that applying
Speaker 13: a private equity approach to government, you know, could potentially
Speaker 13: have very very serious and very unexpected consequences, especially when
Speaker 13: you're talking about cutting not just thousands of employees that
Speaker 13: were cut at Citrix, but potentially tens of thousands, hundreds
Speaker 13: of thousands or more.
Speaker 2: That's Bloomberg, Jordan Robinson, thanks for joining us Tesla Challenger.
Speaker 2: BYD plans to integrate software from deep Seek and is
Speaker 2: also offering you driver assistance features in almost all future
Speaker 2: models at no additional cost to buyers. Let's bring in
Speaker 2: Bloomberg's Craig.
Speaker 9: Triudell for more.
Speaker 2: Craig, before we get into some of these new features,
Speaker 2: what do we know about how by D is incorporating
Speaker 2: this new Deep Seek technology.
Speaker 14: Yeah, it's still a little bit unclear how exactly this
Speaker 14: is going to work, but there is some support here.
Speaker 14: And I think the combination of two names that you know,
Speaker 14: it's hard to kind of think of of two that
Speaker 14: are any bigger in the tech and auto spaces. I mean,
Speaker 14: a deep Seek very much as sort of come lately name,
Speaker 14: whereas by D I feel like has been you know,
Speaker 14: the last few years, just the sort of talk of
Speaker 14: the auto industry in terms of how quickly they've grown
Speaker 14: and and you know just how big of ambitions they have,
Speaker 14: and you know, the one knock that they've they've maybe
Speaker 14: had against them is they don't necessarily bring a ton
Speaker 14: of you know, driver assistance technology to the table. They're
Speaker 14: trying to address that and also do so in a
Speaker 14: way that you know, is very sort of consistent with
Speaker 14: what their approach has been just to the industry in general,
Speaker 14: which is you know, really aggressive pricing.
Speaker 3: Really aggressive rampop in it shares. Recently, we're just showing
Speaker 3: a chart. It's up more than twenty percent over the
Speaker 3: last four training days.
Speaker 4: Craig.
Speaker 3: So, what is it about this cheaper autonomous option.
Speaker 4: That is just leaving competitors for dust? It must be
Speaker 4: a big pash for Tesla.
Speaker 14: Yeah, I mean, I think that's a big part of it.
Speaker 14: When when you sort of measure BYD up against you know,
Speaker 14: a Tesla or some of the you know EV startups
Speaker 14: in China that you know have really kind of leaned
Speaker 14: into driver assistance technology, you know, BYD hasn't really had
Speaker 14: you know, as much to offer there, and so there's
Speaker 14: been a sort of you know a knock against the
Speaker 14: the you know BYD offerings that you know, well, if
Speaker 14: you're going to have to kind of settle right, you're
Speaker 14: you're not going to be able to have the sort
Speaker 14: of latest and greatest in lane keeping or what have you.
Speaker 14: And so I think there was a real sort of
Speaker 14: opportunity for BYD to kind of address that in a
Speaker 14: more aggressive way. And you know, you mentioned that they
Speaker 14: run up in the stock. All it took was a
Speaker 14: sort of you know, invite of an event, and it
Speaker 14: was sort of reminiscent of how you know, Tesla over
Speaker 14: the years has been able to get investors really excited
Speaker 14: just by you know, setting a data on the calendar
Speaker 14: for a big product event that they you know, they
Speaker 14: have something to share.
Speaker 3: Bloomberg's Cratydell, thanks so much, Welcome back to Bloomberg Technology
Speaker 3: and Caroline Hide in New York.
Speaker 2: And I'm Jackie Devalas in San Francisco.
Speaker 3: Quick check on these markets, Jackie, because look, we managed
Speaker 3: to shake off the latest geopolitical acts, those towers coming
Speaker 3: on aluminium and steel coming from President Trump, not managing
Speaker 3: to contail some of the money on that we're seeing
Speaker 3: in then as that one hundred, we're up one and
Speaker 3: a quarter percent. What leads us on a points perspective, Synvidia,
Speaker 3: we managed to claw back some of that sell off
Speaker 3: from Deep Seat. We're about halfway there. It gains another
Speaker 3: two point eight percent on the day. The biggest points
Speaker 3: contributed to the upside maybe feed across from what's happening
Speaker 3: in TSMC and Honheim TSMC, even despite that earthquake, not
Speaker 3: to production, standing by their forecast for the first quarter
Speaker 3: and the full year and committing to AI investment. That
Speaker 3: of course helps the signals for nvideo. So TWU does
Speaker 3: hon Hi at server Maker also showing resiliency there. So
Speaker 3: all about AI today and more on how indeed companies
Speaker 3: and governments are approaching AI safely. Let's go back to
Speaker 3: Paris imst Tom McKenzie standing by the CEO of German
Speaker 3: startup at left Alpha, Caroline.
Speaker 5: Yes, thank you, very pleased to say. I'm joined by
Speaker 5: the CEO and the founder of Alaf Alpha, one of
Speaker 5: the leading AI startups of course in Europe coming out
Speaker 5: of Germany were a focus on sovereignty and on enterprise.
Speaker 5: Jonas start with Deep Seek because I've heard from some
Speaker 5: in this room that it's a spartanek moment, echoing what
Speaker 5: we heard from of course Andres and Horowitz anothers saying
Speaker 5: it's a flash in the pan. Where do you stand
Speaker 5: on DeepC.
Speaker 15: Well, first of all, it's basically a continuation of what
Speaker 15: we've been seen for years. Models get better, they're get
Speaker 15: more efficient open sources, Steve. So it's basically a confirmation
Speaker 15: of what we've been positioning ourselves for four years.
Speaker 9: So for us, it's a victory lab. For our customers,
Speaker 9: it's a victory lab.
Speaker 5: More incremental than spotning moment.
Speaker 15: Well, yes, but I mean, of course it's a spotning
Speaker 15: moment also because China is maybe in some regions ahead
Speaker 15: of the US for the very first time. So that's
Speaker 15: certainly that you're.
Speaker 5: Offering it to your clients. Now have you tested it?
Speaker 5: Are you data secure on this? What does the response be?
Speaker 15: Yeah, I mean our strategy is to include open source model, right,
Speaker 15: So we've been doing this with LAMA, We've been doing
Speaker 15: this with our gate models, and we've been doing this
Speaker 15: with DEFCIG and so our customers, our large enterprises and governments.
Speaker 15: So any transformation you're doing for these customers takes years
Speaker 15: and years. So what is today the very best model
Speaker 15: is almost irrelevant. They just need a partner that can
Speaker 15: guarantee that they can leverage the best of open source
Speaker 15: together with innovation they need for their own business.
Speaker 5: You've told me in the past you think large language
Speaker 5: models will end up being commoditized and essentially price will
Speaker 5: drop to zero. Okay, And yet on the stage behind us, Macron,
Speaker 5: the president of France, is going to get up and
Speaker 5: announce one hundred and nine billion euros of investment to
Speaker 5: kind of match stargate in the US. Is that funding
Speaker 5: misspent both in the US and Europe? Is this misaligned?
Speaker 15: So we need funding, We need funding for our companies,
Speaker 15: We need funding for infrastructure. But what I worry is
Speaker 15: that we are getting distracted and putting too much focus
Speaker 15: on infrastructure. Infrastructure is not going to save US. Infrastructure
Speaker 15: investment alone will not solve digital sovereignty.
Speaker 9: What we need is value creation.
Speaker 15: We need innovation, and then the infrastructure comes almost automatically,
Speaker 15: as like a second order factor.
Speaker 5: You pivoted from building out large language models to building
Speaker 5: out generalized AI operating systems, very much focus on the enterprise.
Speaker 5: I know you're going to push back on the word
Speaker 5: pivot here. What does the response been, is you reflect
Speaker 5: back on that, was that the right decision?
Speaker 12: How are your investors.
Speaker 8: Feeling about that?
Speaker 15: So deep seek For our investors, they were having a
Speaker 15: party because there's this precisely what we've been positioning ourselves for.
Speaker 15: We can solve the general purpose task like writing a
Speaker 15: poem for your mother's birthday, or like email replies. Our
Speaker 15: customers can solve that with the best of the best
Speaker 15: of open source models. But one thing all the customers
Speaker 15: have in common is that the things that are really
Speaker 15: valuable they care about, like compliance workflows, government workflows, manufacturing requirements, engineering,
Speaker 15: all these open source models can't do it. So we
Speaker 15: are adding our own innovation to solve that and everybody's winning.
Speaker 5: We'll start doing for revenues at alf alpha, what do
Speaker 5: they come in at it twenty twenty four? What's your
Speaker 5: target for this year?
Speaker 15: So I'm not going to tell you my target, but
Speaker 15: I'm going to tell you that we just recently signed
Speaker 15: a nineteen million contract with the German Labor Agency Work
Speaker 15: Work Agency, Employment Agency. So these are the kind of
Speaker 15: contracts we're currently signing, and I think that is numbers
Speaker 15: worth getting out of the bed.
Speaker 5: For your German starts up. Elon Musk is meddling. So
Speaker 5: some would say in German politics. What lessons do you
Speaker 5: take from that Elon Musk supporting the AfD in Germany,
Speaker 5: a right wing party.
Speaker 15: I mean, to be fair, we've been meddling in US
Speaker 15: elections as well, right, so it's like a well, I mean,
Speaker 15: some German politicians have been very vocal about their preference.
Speaker 5: Nothing for this. Come on, I mean, what does it?
Speaker 5: Does It underscore your design to have sovereign AI. You
Speaker 5: have a tech mogul interfering in German politics.
Speaker 15: So I don't like it, right, but I think there's
Speaker 15: nothing really we can do about it right now. The
Speaker 15: US are still our partners, are still our friends, and
Speaker 15: we need to find a solution together with the democratic countries,
Speaker 15: together with our partners open AI.
Speaker 5: We're talking to me earlier and they said, the two
Speaker 5: leaders in AI are the US and the CCP, the
Speaker 5: Communist Party of China. Do you agree? Does you have
Speaker 5: skin in the game here?
Speaker 4: Really?
Speaker 15: So that's probably correct, But this is not a Serra
Speaker 15: sum game. This is not about who is the first
Speaker 15: and everyone else is empty handled?
Speaker 8: Right?
Speaker 9: We Davost just two weeks ago we.
Speaker 15: Launched for the We have a first team that launched
Speaker 15: an evolution of the transformer architecture, and I talked to
Speaker 15: several research labs, leading research labs US researchers that are
Speaker 15: now starting to look at that. So it's with all
Speaker 15: likelihood the next architecture of the next evolution of the
Speaker 15: transformer is coming out of Europe.
Speaker 5: Do we need to be worried that we can't access
Speaker 5: and we can't build out or in semiconductors. Not only
Speaker 5: do you have a Nvidia and AMD in the US,
Speaker 5: but you also have Amazon Microsoft developing their own semiconductors
Speaker 5: around artificial intelligence. Is that a gap that we need
Speaker 5: to close and how do we do it?
Speaker 15: Well, that's a painful gap, certainly, right. Also the fact
Speaker 15: when you look at the capex the hyperscalers have assembled,
Speaker 15: that's almost so possible to kind of reach the same levels.
Speaker 15: And it's equally unlikely that we'll build a competitor to
Speaker 15: AMD or Nvidia basically with a snip off a finger.
Speaker 15: So that's painful, but it's a reality we have to accept.
Speaker 15: And I think every money that is directed against like
Speaker 15: building a competitor to these jagernauts is wasted money.
Speaker 5: Okay, honest, thank you very much, And DIG always a
Speaker 5: pleasure to speak to you and so and Joyalist of course,
Speaker 5: the CEO and co founder of Alah Alpha, speaking to
Speaker 5: me here at the Gonepalais just ahead of Macrant's speech.
Speaker 5: The president of course of France guys.
Speaker 3: Back to you, Tom McKenzie, Thanks so much. It's time
Speaker 3: now for talking tech. First up, Deep Seek is ramping
Speaker 3: up hiring recruiting specialists for artificial general intelligence roles, data experts, researchers,
Speaker 3: and a legal chief. All this really signaling the Chinese
Speaker 3: AI startup to actually expand ambissions after its stunned markets
Speaker 3: for the cheaper model that was on par with Open Aiyes, plus,
Speaker 3: Apple gets a mandate from the UK. The government has
Speaker 3: ordered Apple to build a backdoor to access global user data.
Speaker 3: It's a move that could spart one of the biggest
Speaker 3: privacy battles for the iPhone maker. In an undisclosed order
Speaker 3: in January, British authorities asked Apple to circumvent encryption news
Speaker 3: to secure user data in its cloud service, and Rivian
Speaker 3: and anounced that it will begin selling its EV trucks
Speaker 3: that we're designed for Amazon to other customers. This is
Speaker 3: an effort to boost revenue as consumer demand for EV
Speaker 3: cars actually slows the commercial vehicles can be purchased by
Speaker 3: fleets for any size, but deliveries slated to begin in
Speaker 3: the second quarter. Meanwhile, we're watching shares of LIFT. Interesting
Speaker 3: reports coming where up some three percent could robotaxis be
Speaker 3: offered by Lift as soon as twenty twenty six. That's
Speaker 3: a report coming from TechCrunch and from an executive inside Lift.
Speaker 4: Jackie coming up.
Speaker 2: Joseph Makett from the Center for Strategic and International Studies
Speaker 2: joins us to talk about how energy demand could impact
Speaker 2: AI growth. This is Bloomberg.
Speaker 3: Nock Here will replace its CEO with Intel's recently appointed
Speaker 3: head of AI, Justin Hotad. The surprise announcement comes as
Speaker 3: nock Here it's the network equipment maker watch the exit
Speaker 3: a prolonged slump in orders from phone operating Now the
Speaker 3: incoming CEO joined Bloomberg Television earlier today.
Speaker 4: Just take a listen.
Speaker 16: My focus coming in though, is going to be to
Speaker 16: spend time with all of our major stakeholders, and one
Speaker 16: of those will be our customers and particularly our telco
Speaker 16: customer base, to understand how we're serving them well and
Speaker 16: what we can do to continue to serve them better
Speaker 16: and drive growth the way I think about it is
Speaker 16: we have a strong and broad portfolio today, some of
Speaker 16: which is being touched by AI today. But I have
Speaker 16: also The way I think about the AI cycle is
Speaker 16: it will be a supercycle. And much like we saw
Speaker 16: with the Internet, it spawned the mobile Internet, it spawned cloud,
Speaker 16: I believe we'll see that same thing with AI.
Speaker 2: As the AI Summit is underway in Paris, let's also
Speaker 2: consider the future of AI safety regulations here in the
Speaker 2: US under Trump. This just as a top official at
Speaker 2: the USAI Safety Institute steps down, Let's bring in Bloomberg
Speaker 2: Sharing Gafari for more. Sharen talk us through what this
Speaker 2: agency was doing and how this departure potentially puts that
Speaker 2: progress at risk.
Speaker 9: Yeah.
Speaker 17: So the USAI Safety Institute is relatively new, right, a
Speaker 17: little over a year old, and its mandate was to
Speaker 17: sort of try to convene some standards around what AI companies,
Speaker 17: you know, are going to be, how they're going to
Speaker 17: be testing their AI models to make sure that they're safe,
Speaker 17: and also to test their capabilities. Now that Elizabeth Kelly,
Speaker 17: the head of that institute, is stepped down and there's
Speaker 17: no replacement announced, it's a little bit unclear what the
Speaker 17: future of this institute will look.
Speaker 3: Like just at the time that world leaders, indeed leaders
Speaker 3: of companies gathered to talk about the future of AI,
Speaker 3: of any sort of guardrail that Europe can agree with
Speaker 3: the United States, It's a pretty pivotal movement. It feels
Speaker 3: like Jade Vance is going to be speaking on it.
Speaker 12: That's right.
Speaker 17: So we have, you know, the US Vice President planning
Speaker 17: to have a presence at this summit. But again, you
Speaker 17: sort of in order to kind of get all these
Speaker 17: companies together to give access to their models, to test them,
Speaker 17: to see how safe each release is, you sort of
Speaker 17: need I mean, I guess the argument for the USA
Speaker 17: Safety Institute is that they said that you need some
Speaker 17: entity to sort of actually be in the weeds doing
Speaker 17: this work. And so who will be the leader of
Speaker 17: this institute, what their priorities will be, what kind of
Speaker 17: safety evaluations they will run, is critical beyond the kind
Speaker 17: of executive level that we see Jbvance taking leadership on.
Speaker 3: Well said Sharin Vifari's great reporting as ever, thank you. Meanwhile,
Speaker 3: as governments and companies around the world, as we say,
Speaker 3: announced plans to build or expan AI infrastructure, another question is.
Speaker 4: Being raised, how are they going to power it all.
Speaker 3: Joseph miket Is with US is the director of Energy
Speaker 3: Security and Climate Change over at the Central Strategic and
Speaker 3: International Studies.
Speaker 4: And look, it's so interesting in this moment that France.
Speaker 3: Is going to be committing, we understand, to a gigawat
Speaker 3: of nuclear energy for this AI exuberant moment. You've got
Speaker 3: leaders of Microsoftware indeed Andy Jasse just last week saying
Speaker 3: it's all about energy that stops us building out data centers. Joseph,
Speaker 3: what are we not getting about energy needs here?
Speaker 18: Well, you know, a data center is nothing more than
Speaker 18: a bunch of chips and racks that will take models, data,
Speaker 18: use algorithms to cook together intelligence, answer questions, help people
Speaker 18: perform economically productive activities. Energy is the flame that powers
Speaker 18: that process. Electricity in particular, and when we look at
Speaker 18: what the leading hyperscalers and companies want to build, these
Speaker 18: are immediately going to be some of the largest electricity
Speaker 18: loads in the United States and probably the largest class
Speaker 18: of new generation capacity adding over the next five to
Speaker 18: ten years.
Speaker 2: So there is a real question about just how much
Speaker 2: the electricity grid can actually withstand.
Speaker 4: What do we know about.
Speaker 2: What buy in we need at the local level, because
Speaker 2: a lot of these plans are coming from the federal
Speaker 2: level and it's not clear to me that do they
Speaker 2: actually need more permission or perhaps collaboration with municipalities states.
Speaker 12: So it's important think about the size of the challenge.
Speaker 18: We need to even to hit sort of medium level
Speaker 18: forecast for how much data center energy we're going to
Speaker 18: need over the next five years, we need to build
Speaker 18: more generation capacity over that next five years, then we
Speaker 18: added over the last twenty. It's just a muscle memory
Speaker 18: that in the United States we don't really have and
Speaker 18: that involves everyone from the state and local permitting committees,
Speaker 18: from local utilities, and there is a role for the
Speaker 18: federal government in providing some backstops, some funding, perhaps some
Speaker 18: permitting reform help so that we can get the speed
Speaker 18: or we can get power to these data centers with
Speaker 18: enough speed. The reality is we don't just have a
Speaker 18: bunch of gigawatt power plants lying around that are ready
Speaker 18: to plug data centers into.
Speaker 3: So give modifort tends to the current administration. Apologies stacking
Speaker 3: entirely my fault give marks out of ten for the
Speaker 3: current administration.
Speaker 18: I think we need to see some more texture around
Speaker 18: what the current administration wants to do. President Trump has
Speaker 18: said we are going to open up all the breaks
Speaker 18: in terms of permitting. We're going to look even to
Speaker 18: coal plants to rebuild these kinds of things. I think
Speaker 18: what's really important is what's going to match what the
Speaker 18: hyperscalers and the companies want to do, and what matches
Speaker 18: what's going on in the power sector.
Speaker 6: Now.
Speaker 18: When we look at what we expect to see over
Speaker 18: the next few years, the real additions are going to
Speaker 18: be solar, maybe some wind batteries, natural gas. I think
Speaker 18: the administration is in a position to help some of
Speaker 18: that proceed. Then we need to look at long term
Speaker 18: growth because this isn't the problem that ends in twenty
Speaker 18: thirty when the first few mega sized data centers come Aliine,
Speaker 18: if this is truly the economic revolution that the companies
Speaker 18: are investing toward.
Speaker 12: We need to have a much more ready.
Speaker 18: System for further growth in the twenty thirties and there
Speaker 18: I think we want to see the administration move toward
Speaker 18: nuclear power. We need to see investments in modernizing our grid.
Speaker 18: Those are going to be the key things for long
Speaker 18: term progress in the United States.
Speaker 2: Joe, So, where does this leave climate goals, because when
Speaker 2: I hear coal power plans, it seems like it's actually
Speaker 2: taking a step back. And as you mentioned, hyperscalers are involved,
Speaker 2: what are they going to be amenable to, especially because
Speaker 2: they have net zero goals themselves. You look at climate security,
Speaker 2: this is not just a story about the environment, but
Speaker 2: it's one that has to do with national security. Talk
Speaker 2: to us about where it leaves as goals.
Speaker 18: Of course, there's a lot of considerations that we need
Speaker 18: to think about, especially as the government gets involved trying
Speaker 18: to support these megaprojects. I suspect that we're not going
Speaker 18: to see new coal plants build the United States to
Speaker 18: power data centers. Instead, where we want to see those
Speaker 18: hyperscalers want to see investments in clean energy. One of
Speaker 18: the things that is most helpful in that regard is
Speaker 18: that they're pretty deep pocketed and they need to spend
Speaker 18: to build power quickly, but they also want to spend
Speaker 18: and can make investments in the novel technologies that will
Speaker 18: allow us to grow this stuff over time. That could
Speaker 18: be small modular reactors. We've already seen them restarting large
Speaker 18: nuclear actors here in the United States, and so the
Speaker 18: reality of the system today is the more we build,
Speaker 18: the easier we make it to.
Speaker 12: Build, the cleaner and cleaner.
Speaker 18: I think this process is going to be for us.
Speaker 2: What's the breakdown of what that share can look like?
Speaker 2: Because we've heard about nuclear energy kind of for a
Speaker 2: long time, and I would like to kind of get
Speaker 2: a better sense of what the horizon actually looks like.
Speaker 2: Is it a five year or ten year kind of initiative?
Speaker 12: We move really really fast.
Speaker 18: I think we can make both grade upgrades and nuclear
Speaker 18: power a part of the solution set early in the
Speaker 18: twenty thirties, but a lot of that stuff is still
Speaker 18: a little bit far from commercialization.
Speaker 12: It'll take us time to get there. Over the next
Speaker 12: few years.
Speaker 18: I don't expect to see much difference in the capacity
Speaker 18: that's added from what's been added historically. The US builds
Speaker 18: a lot of solar, the US has large natural gas resources,
Speaker 18: and the investments we are seeing over the last year
Speaker 18: and the things we expect to see over the next
Speaker 18: couple of years are going to combine those two things.
Speaker 18: Combine those two as principally with some battery storage and
Speaker 18: some investments in green energy and other places to ban
Speaker 18: to manage both the emergent power need, the need for stability.
Speaker 18: You want to run these facilities basically all the time
Speaker 18: once you've made such a large investment in the underlying
Speaker 18: chips and data, and then dealing with the climate effects
Speaker 18: by making investments in renewables and other things.
Speaker 2: That's Joseph Market from the Center for Strategic and International Studies.
Speaker 2: Thanks for joining us.
Speaker 3: Just take a look at shares of t Mobile right now.
Speaker 3: Stock as you'll see, is up today. The telecom provider
Speaker 3: has officially launched its service with the law Musk's Starlin Network,
Speaker 3: softwering customers texting and data usage completely off the grid
Speaker 3: at the low promotional price of zero dollars.
Speaker 4: It's free for now.
Speaker 3: The offer is open to anyone for a limited time,
Speaker 3: with the service eventually costing fifteen dollars a month. Tmobile
Speaker 3: announced the program on Sunday with an ad debut during
Speaker 3: the Super Bowl Jackie.
Speaker 2: For more on the Super Bowl and how the NFL
Speaker 2: is dominating entertainment, Bloomberg's f Lucas Shaw joins us. Now
Speaker 2: Lucas viewership of almost everything on TV has plummeted, but
Speaker 2: somehow the NFL's has just gotten bigger. Help us understand
Speaker 2: this resilience because it's not every day that we're all
Speaker 2: tuning into a nail bier like last night.
Speaker 9: Oh yeah, that was not the game that the NFL wanted.
Speaker 12: You know.
Speaker 9: Part of it is just live in sports, right.
Speaker 19: You look at the television business and as the ratings
Speaker 19: for scripted shows has gone down, you know, sports has
Speaker 19: stayed pretty resilient, whether that's football, baseball, basketball. Football has
Speaker 19: been much stronger and gotten much bigger than basketball and baseball.
Speaker 19: I think part of it is that there are so
Speaker 19: few games, this idea of scarcity, right, so every game
Speaker 19: in the football season matters in the way that whatever
Speaker 19: NBA games are happening this week don't really.
Speaker 9: And then the I don't know, the product is just
Speaker 9: really good.
Speaker 19: You know, there was a moment six eight years ago
Speaker 19: where the NFL looked like it was a little shaky,
Speaker 19: The ratings were going down. There were a lot of
Speaker 19: different reasons for that, and it has fully rebounded.
Speaker 3: So interesting in those times that maybe we were questioning
Speaker 3: ESPN had at the time, John Skipper, you write in
Speaker 3: your newsletter, was actually trying to persuade Bobyger to get
Speaker 3: out of the NFL, go bigger, on other sports.
Speaker 4: But good thing Bobbiger ignored.
Speaker 3: Him, and a lot of it is about content and
Speaker 3: about knowing the people. It's almost like you're following some
Speaker 3: sort of real life, real life celebrity culture here.
Speaker 19: Yeah, I mean, I thought that was a really interesting
Speaker 19: story that John Skipper told me. He was the head
Speaker 19: of ESPN for a long time, really brilliant executive, and
Speaker 19: he had the same feeling I think that I did
Speaker 19: several years ago, which was he saw all the bad
Speaker 19: news around concussions and thought, Okay, this sport is unsafe.
Speaker 19: It's going to be on the decline. Turns out most
Speaker 19: Americans do not care. And to your point about celebrity,
Speaker 19: they're way more interested in Patrick Mahomes or in the
Speaker 19: Taylor Swift of it all. I mean, what a couple
Speaker 19: of the emails I got from readers last night were
Speaker 19: that I did not give Taylor Swift enough credit for
Speaker 19: the current popularity of the NFL.
Speaker 3: And sadly she probably wasn't that exuberant after last night.
Speaker 3: More love being shown for the halftime performances as well.
Speaker 3: But they make some big bets on when to play
Speaker 3: shows right, like Christmas Day for example.
Speaker 19: Yeah, I mean, look, the NFL has gradually expanded its
Speaker 19: control over the schedule.
Speaker 9: It used to be that the.
Speaker 19: NFL was primarily a Sunday product, and then there was
Speaker 19: Monday Night Football. They added Thursday Night Football, which is
Speaker 19: now on Amazon. I think they're very happy with that
Speaker 19: because Amazon helps them reach more viewers get into streaming,
Speaker 19: and they can also prime Amazon to maybe bid on
Speaker 19: some international rights that they'll sell down the line. They
Speaker 19: started to have more games on Saturday. I think there's
Speaker 19: an expectation that eventually, because they're playing games and other markets,
Speaker 19: that they might create sort of a new window early
Speaker 19: Sunday morning, and that's the type of thing that they
Speaker 19: might chop to a Netflix.
Speaker 9: So yeah, NFL is now five months long.
Speaker 3: Lucas Shaw all over NFL this week, And even if
Speaker 3: you're not watching it that much yourself, what does it
Speaker 3: for this edition of Blue Bag Technology, don't forget to
Speaker 3: check out our podcasts. You can find it on the
Speaker 3: terminal as well as online on Apples, Spotify, and iHeart.
Speaker 4: This is vloume leg Technology